With the Government’s private healthcare rebate potentially on the chopping block in the May budget, big private insurers are lobbying hard to make sure it stays, or at least is not cut further.

The 30 per cent rebate on premiums was introduced in 1999 by the Howard government to encourage consumers to take out private cover instead of using the overloaded public health system.

Australia’s biggest private insurer, Medibank Private, is urging the Federal Government to keep the rebate and is warning some customers will drop their cover if the rebate is abolished.

• A promise Malcolm Turnbull surely regrets
• Morrison pledges spending cuts in budget
• PM: ‘We can’t give an inch to people smugglers’

“The rebate is the Government’s subsidy on the purchase of a premium when they take out private health insurance,” Medibank managing director George Savvides told the ABC’s AM program.

“If the Government was to withdraw that subsidy then the individual has to make the difference up. So it’s quite a blunt instrument, Government to consumer.”

Mr Savvides confirmed discussions are underway, with six concurrent reviews on health insurance reform, including the future of the Private Health Insurance Rebate.

However, Mr Savvides warned any tampering or removal of the rebate would be unsettling to Australians who have taken out private cover.

“That I don’t think will go down very well given that the Australian Government is committed to seeing as many Australians as possible take out private cover, so that they are taking pressure off the public system,” Mr Savvides said.

Mr Savvides said the end of the rebate “would be counterproductive from an economic point of view.”

The rebate has been targeted by welfare groups in the lead-up to the budget as middle-class welfare.

However, Mr Savvides said the rebate is a strong feature of the healthcare system.

“We are talking about 13 million Australians who are privately covered in terms of insurance and many lower and middle income Australians take out private cover for the benefits it provides,” Mr Savvides said.

“Older Australians who are on fixed incomes need that subsidy to be able to afford private cover and stay out of the public system.”

Last week Mr Savvides delivered a 58 per cent increase in half-year profit to $227.6 million.